DanielV01
Expert Alumni

State tax filing

It depends.  The deduction on line 8 (standard or itemized deductions) comes immediately after Adjusted Gross Income (line 7) has been determined.  However, line 9 (QBI, Section 199A deduction) is determined differently.  The 20% Section 199A deduction is taken on the lower amount of qualified business income and taxable income (line 10, not line 4a).  Line 4b is the taxable amount of a pension or an IRA distribution and has nothing to do with the QBI calculation.  In more detail, here is how the QBI calculates:  

The 20% QBI deduction calculation compares the difference between 20% of the QBI (your Schedule C net income, minus any other deductions attributable to your Schedule C income, which encompasses deductions such as the solo 401K deduction, Self-Employed Health Insurance Deduction attributable to the business, and 1/2 of SE tax being deducted on your return) and 20% of your Taxable Income  (which encompasses other deductions and income amounts)  Whichever amount is lower is the QBI deduction.  

For instance, let's say you are single and self-employed (using the standard deduction) with 50,000 of net self-employment income, and no additional wages.  One-half of SE tax and your SE health insurance premiums lowers your net business income to 42000.  20% of your net business income is 8400.  However, your taxable income is 30,000, and 20% of 30,000 is $6,000.  On your 1040, Line 8 would be $12,000, and Line 9 would be 6,000.

For more information on the QBI deduction, see the following FAQ:  https://ttlc.intuit.com/replies/7019998

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